What happens to demand, supply, equilibrium quantity and equilibrium price given these events?
Given the products below and the events that affect them, indicate what happens to demand , supply , equilibrium quantity , and equilibrium price. Identify the determinant of demand and supply that causes the shifts. A) Gasoline. Oil production declines due to a crisis in the Middle East, but Americans, still aware of terrorist threats, take vacations via automobile transportation and drive more. B) New homes construction in California. Disposable incomes fall as the economy moves into recession because of the dot-com bust and Hewlett-Packard fiasco. The productivity of home construction workers and builders increases through the increased use of building “pre-fabricated” homes. C) Cotton. The U.S. government cuts its subsidy to American cotton farmers, but more Americans stop purchasing cotton fabrics in favor of other fabrics (silk, linen, etc.).
Related Questions
- How will the equilibrium be achieved? Who sets the price, and what happens if there is disequilibrium trading?
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